September 15, 2017 by Rd2mV4
Submitted by: James Oleander
People who get a payday loan in the United Kingdom can use the money to pay a variety of bills such as car repairs and childcare bills. These loans are great for people who do not have credit cards but need cash urgently. Even though payday loans are easy and convenient to get, there are a few issues that can prevent people from obtaining them. One important aspect people should consider before applying for a cash advance is how their credit report will be affected.
Payday loans in the United Kingdom
Consumers need to remember that usually, instant payday loans will not directly affect their credit scores. Almost every lender forgoes the credit review process. But even though credit is not a big concern for lenders, there are some situations that can negatively affect one’s score. For those who do not repay the loan according the terms of the contract, the consequences can be severe. Most of the time, lenders will not report late payments, especially if an extension is granted. However, people who completely default on their payday loan should expect that default to be reflected on their credit score.
Once the delinquent payday loans is reported to the credit bureau, the borrower will run into additional financial problems. Besides a lower credit score, people who default will have a harder time getting a loan, credit card or other financing in the future. In addition, a lender does have the option to file suit in order to reclaim lost money. After becoming aware of how delinquent payments can effect one’s finances, there are some measures borrowers can take to keep their credit report in good standing.
First of all, borrowers should always take the time to prioritise how they plan to pay their bills. The best, and really the only, way an individual can avoid the negative effects of payment defaults is not to pay late. If one cannot repay the loan per the agreement, they should notify the lender right away and try to work out a revised repayment plan. Most repayments are taken via automatic drafts from the borrower’s bank account. Therefore, the borrower should make sure they have enough funds in the bank on the day the automatic draft is scheduled.
Payday loans UK lenders
There are also lenders who report on-time payers to credit bureaus, which is advantageous to those who satisfy their payday loans online as their credit score will increase. However, not all lenders will do this so it is important to shop around and verify that they do before signing a loan agreement. Of course, people should only borrow an amount they can afford to pay back. And if one needs something clarified on the contract, they should not be afraid to ask the lender.
These companies do sometimes check your credit standing with credit reference agencies, just as banks do before they approve you for a loan. However, the companies that deal in payday loans are not very stringent in the standards they apply for qualification for funding. You will therefore get cash from them that will help you tide over your financial difficulties.
It is very important for you to understand that the ease with which you can get money from these companies comes at a cost. The rate of interest that these companies charge is usually extremely high which is only to be expected since they have to take on a higher level of risk in order to give out bad credit loans.
Financial institutions worldwide base their rate on interest on the amount of risk they have to take on, for obvious reasons. Most companies that offer payday loans charge a rate of 25 % on the amount they lend you. However, there are plenty of takers for these loans because they are sometimes essential in order to help people deal with financial crises of all sorts.
A casual search of the internet will lead you to plenty of companies that offer instant payday loans even if you have a low credit rating. Make sure that you choose one that offers you the best terms so that the total cost can be as low as possible. You should also ensure that you pay them off by the agreed date instead of defaulting on them. This is essential in order to make sure that your credit rating does not fall even further, making subsequent loans impossible or far too expensive.
About the Author: I have a passion for all things payday loans. I’ve been working closely with the website
for a while now and just contributed a load of articles including this one
which I am particularly proud of.
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